New CA Law Negative Effect for Appraisers
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Some of you appraiser in California may not realize there is a new law, AB-5, which goes into effect on 1/1/2020, less than 60 days from now that will have a significant effect on the working relationship between appraisers and AMCs. Most appraisers work as Independent Contractors when working with AMCs. However, this will most likely change under this new law, AB-5, as of the first of the year. Most engagement letters or other instructions from AMCs to appraisers are in conflict with this new law as it pertains to the use of Independent Contractors. Under most of these agreements the AMC will be required to treat all appraisers as Employees. I suspect that appraisers will see rush of new engagement letter/instructions from AMCs to appraisers within the next 30-45 days in an attempt for them to maintain the Independent Contractors status of the appraisers.
This is an opportunity for the appraisers to take back control of the appraisal process by taking the lead on this issue. Appraisers should draw up their own “Agreement to provide Appraisal Services” and provide it to the AMC/Lender at the time of acceptance of an assignment and the appraiser should refuse to accept or agree to any engagement agreement presented by the AMC/Lender. At the end of these comments I have provided an example of an “Agreement to provide Appraisal Services” that appraisers could use as a starting point for an agreement, please feel free to change or add to it.
I have talked to the Lobbyist for the Real Estate Association of California located in Sacramento and she has advised me that the Real Estate Industry (Real Estate Agent & Brokers) has been exempted from this law. She suggested that the appraisers contact Assembly person Lorena Gonzales from the San Diego area for assistance since she heads the Committee in the State Assembly that is responsible for this new law.
Contact Assembly Member Lorena Gonzalez
Capitol Office, Room 2114
P.O. Box 942849, Sacramento, CA 94249-0080; (916) 319-2080
1350 Front Street, Suite 6022, San Diego, CA 92101; (619) 338-8090
All appraisers in Lorena Gonzalez district should contact her and explain that the Real Estate Appraisers while not directly affected by the law, the AMCs are, and this will have very negative effect on the independence of the appraiser and their ability to continue to operate as an Independent Contractor.
Appraisers need to come together and unite to protect our industry, now is the time.
SAMPLE AGREEMENT FROM APPRAISERS
(This was not written by an attorney, you may want to contact an attorney to have them provide a more proper agreement)